Why is IRC making this change?

The program is being revised for two reasons: The first reason is to make IRC's retirement program more flexible and meaningful for all employees. A generous retirement benefit that is also portable is essential to attracting and retaining IRC's quality people. Additionally, the new program gives all employees greater control over their retirement savings, is easier to understand, and allows new eligible employees to participate immediately. The second reason is to stabilize the programs annual cost, to help ensure that the IRC will be able to confidently plan for the future and fulfill its mission in the long term. Volatility and fluctuations in the stock market affect the value of an organization's pension fund, making it difficult to project financial needs from one year to the next. The change in the retirement program will make it easier to predict IRC's future plan costs.

Is the IRC Retirement Plan fully funded?

The present IRC Retirement Plan has assets which are almost sufficient to provide all earned benefits under the Plan. As soon as calculations are completed as of the December 31, 2006 termination date, the organization plans on depositing any remaining contributions required to fully fund the Plan.

Who pays the cost of the termination of the IRC Retirement Plan?

The IRC will pay all of the costs for the required calculations and government filings to process the termination of the IRC Retirement Plan. The enhancements to the 403(b) Savings Plan will cost IRC more money than the Retirement Plan, but will result in better overall financial health and stability for the organization.

Is the IRC saving money by making this change?

No. In fact, the annual cost of the retirement program to the IRC will increase as a result of this change. This change is being made in the best interests of the IRC and its employees for the long term.

What is going to happen to my pension?

If you are an eligible employee, meaning you have been employed by IRC for at least one year as of December 31, 2006, you will become 100% vested in the retirement benefit you have accrued as of that date. You may then select one of the following options for your accrued retirement benefit:

• - Receive an annuity from an insurance company to pay out your vested monthly pension benefit when you reach age 65.
• - Transfer the value of your vested benefit into IRC's 403(b) Savings Plan.
• - Transfer the value of your vested benefit into another tax-sheltered vehicle.
• - Take the value of your vested benefit as a lump sum cash payout.

Each of these options may have a different tax implication for you. We strongly recommend that you seek financial advice before deciding how to manage your vested benefit.

Beginning January, 2007, you will begin receiving contributions in your Savings Plan account and will no longer be accruing a pension benefit under the IRC Retirement Plan. And, on January 1, the name of the current IRC 403(b) Savings Plan will be changed to the IRC 403(b) Retirement Savings Plan.

What are the hallmarks of this new program from an employees perspective?

The new retirement program is designed to provide a more portable benefit and to give employees more control over and responsibility for their retirement savings. [In addition, IRC's base contributions will be invested in the Retirement Savings Plan for each eligible employee on a monthly basis. At the present time, the IRC makes its pension funding payments on an annual basis. It will also continue to help us to attract and retain the best employees in the field.

What about from IRC's perspective?

Under the current plan, the amount that the IRC contributes to the Retirement Fund for all participating employees varies from year to year depending on interest rates, the fluctuation in the Retirement Fund investments, and other hard-to-predict factors. The new program, focusing exclusively on the enhanced Retirement Savings Plan, will allow the IRC to more accurately forecast its retirement program costs. Overall, however, the annual cost of the retirement program to the IRC will increase.

Is the IRC considering making any other changes to the Savings Plan?

The Retirement Savings Plan will continue to be administered by the Pension Committee, which will be renamed the Retirement Savings Plan Committee. The Committee will continue to monitor the Plan and ensure that the funds offered as well as participants' access to information remain competitive. No additional changes in the contributions the IRC makes, other than those described above, are being considered for the foreseeable future.

How will the accrued benefit under the terminating IRC Retirement Plan be calculated?

Your benefit will be calculated using the present formula under the IRC Retirement Plan, and your compensation and service through the December 31, 2006 termination date of the Plan.

How frequently will the IRC make the base contribution to my Savings Plan account?

Base contributions will be made monthly. Under the current arrangement, the IRC's contributions to the Retirement Plan are made annually.

Will I be able to invest my base contributions and my contributions (plus the IRC match) in different investment funds if I want to?

Yes, you will. In fact, if you elect to transfer the value of your vested Retirement Plan benefits into IRC's Retirement Savings Plan, you may elect to invest that money in any of the Plans available funds.

I have not been participating in the IRC 403(b) Savings Plan. Will I now have to begin contributing to the plan?

No, you are not required to begin making contributions to the Savings Plan. However, we suggest that you consider making such contributions, to take advantage of the IRC's generous matching contributions.

I have been with the IRC for less than three years, so I am not vested in my pension benefits. Am I going to lose those benefits?

No, you will not lose those benefits. Whatever Retirement Plan benefits you have accrued as of December 31, 2006 will become fully vested as of that date.

What will happen to my contributions and the match in the present 403(b) program?

Both your present employee contributions and the IRC's match will continue to be invested based on your current investment elections. Future employee contributions, the IRC match, and the new base contribution will be invested based on your investment elections in effect now or as you elect to change them in the future.

How often will I receive a statement showing the value of my Retirement Savings Plan account?

All Retirement Savings Plan participants have been and will continue to receive a quarterly statement showing the value of their investments. Principal Financial Group, our Plan manager, also has a website, www.Principal.com, which enables you to check balances and change investment options online.

Will I be able to invest my base contributions and my contributions (plus the IRC match) in different investment funds if I want to?

Yes, you will. In fact, if you elect to transfer the value of your vested Retirement Plan benefits into the IRC's Retirement Savings Plan, you may elect to invest that money in any of the Plans available funds.

What are my options under the new enhanced Retirement Savings Plan if I leave the IRC?

As under the present 403(b) program, you may elect to receive a lump sum distribution under the new enhanced Retirement Savings Plan of your entire account balance (your contributions, the IRC match, and base contributions with interest). You may also elect to roll over your account balance into another qualified plan.

I'm an IRC international employee. What US tax implications will I face because of my participation in the new IRC Retirement Plan?

First, the tax implications have not changed for our international staff (both US and non-US) from the retirement program we have had in the past.

For US citizens overseas, any payments from the current IRC Retirement Plan (both monthly payments after retirement and lump sum distributions) and distributions based on contributions that will be made on your behalf after December 31, 2006 (pursuant to the 403(b) Plan), may be subject to US taxes based on your individual situation.

For non-US citizens working for the IRC overseas, as well, any payments from the current IRC Retirement Plan (both monthly payments after retirement and lump sum distributions) are subject to US taxes. Your payment of US taxes at the time of a plan distribution will depend upon whether or not there is an existing tax treaty between the US and your country of origin. If a tax treaty does not exist, taxes will only be incurred on the IRC contribution on your behalf as well as all investment earnings; US taxes will not be assessed on your contribution to the plan. (Under the current "pension plan" your entire benefit would be subject to US taxes for those without tax treaties.)

Regardless of US taxes, you may be subject to local taxes based on tax laws in your country. We strongly urge all employees to seek the advice of a financial advisor or knowledgeable friend prior to requesting a distribution from the plan.

What is the IRC planning to do to make the Retirement Savings Plan more attractive to its international employees (especially the non-US citizens)?

Part of the Pension Committee's (soon to be renamed the Retirement Savings Committee) responsibility is to review investment options available to 403(b) Plan participants. The Committee is currently evaluating a number of investment funds that specialize in "international" (non-US) investments, and intends to add one or more of these funds to the Plan's investment options, effective January 1, 2007.

As my age changes, making me eligible for a higher base contribution, when can I expect to start receiving the new amount?

The level of a participants base contribution will be determined as of each December 31 for the following calendar year. For example, if your age and years of service equaled a total of 45 years as of December 31, 2007, you would receive the higher level of base contribution (for 45 years) starting January 2008.

If I decide to convert my accrued pension benefit to an annuity sometime in the future, will I lose any benefits in the process?

No, you will not lose any of your accrued benefits. If you elect to receive your benefit in the form of an annuity, it will be guaranteed by the insurance company and will begin at your normal retirement date. More information about your pension and the date(s) that you can begin to receive payments if you select an annuity will be provided after your benefits are computed following the termination date at the close of this year.

Is my account under the new enhanced Retirement Savings Plan protected from IRC's creditors?

Your entire account balance is held strictly on your behalf, and cannot be attached by any creditor of the IRC, in much the same way that the present IRC Retirement Plan is protected.

When I reach age 65, how will the value of my new retirement benefit compare against the value of the benefit I would have accrued under the current Retirement Plan?

That is impossible to determine. The value of your retirement benefit will depend on the performance of the funds in which you have invested.

Can I elect to continue to participate in the current IRC Retirement Plan after January 1, 2007?

No. The plan will be terminated as of December 31, 2006.

How does the new IRC Retirement Program compare to the retirement programs of other NGOs and for-profit organizations?

According to the data collected by our outside consultants, Cammack Associates, the combination of IRC's base contributions and matching contributions is, on average, more generous than most NGOs, non-profit organizations and for-profit companies.

Now that I have readthrough the site, I still have some unanswered questions. How can I get answers?

E-mail your questions to Vince Tomo. If your question is of a personal nature, Vince or another member of the Benefits Team will reply directly to you as soon as possible. If the questions are more general in nature, the questions and the answers will be posted on this web site for all employees to view. In addition, we are going to schedule employee meetings at which employees can ask questions regarding the new retirement program.